29 APR 16 – Executive Intelligence Summary

The National PMESII section is a break down of national- and regional-level Political, Military, Economic, Social, Infrastructure, and Information events and trends. Appendix: Collection of acronyms and definitions used.

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The Mercatus Center at George Mason University published a study entitled, “Federal Regulation and State Enterprise” (FRASE) that found a strong correlation (.62) between the importance of regulation by state and the state’s Republican voting patterns in the 2012 election. The FRASE findings saw that conservative states specialized in industries that were heavily regulated, especially in oil and coal, which would explain the higher degrees of regulation.

(AC: While the report questions why there’s a distinct political correlation, they don’t provide any answers. It’s too early to say that there’s a factual basis that explains why conservative states experience higher amounts of regulation on critical industries, although we can certainly speculate on good authority that the Obama Administration is using regulation of industries critical to conservative states as an avenue to stifle their politics. No one needs reminding that in 2012, both Obama and his aide Valerie Jarret threatened to punish their political enemies.)

Military/Security/Defense: This Week’s Developments in Conflict with Russia & China

We continue to see developments that indicate U.S. tensions are heating up with Russia in Europe and with China in Southeast Asia, particularly with regards to information that doesn’t make the mainstream news. Last week, we described the root of these conflicts as a fight over global order and who will lose or inherit control over the global landscape. Our outlook is firm that America stands to lose more than it gains, and based on previous reporting, the U.S. stands a great deal of risk in a war with either Russia or China to maintain global supremacy. A lost conflict is likely to hasten the decline of America, incite additional aggressive behavior and saber-rattling, and amplify the effects of domestic unrest. Here are some developments from this month:

Russia

In a speech this week in Hanover, Germany, President Obama criticized European nations for not spending enough on defense. Obama said that many NATO nations are “complacent” and haven’t lived up to annual defense spending outlined in NATO agreements.

President Obama’s remarks come at a time when former Italian prime minister warned that the European Union (EU) faces an existential crisis. “The EU is going through a crisis which leads me and others for the first time to consider whether we are not heading towards disintegration,” Mario Monti said. “The EU has never been hit by such a high number of different crises of this gravity. What I am concerned about is that, although the EU has developed itself historically through a process of crisis, response to the crisis, and advancement, this time around it may well not happen.”

The nominee to lead the European Command (EUCOM) accused Vladimir Putin of “deliberately trying to break up NATO” earlier this week. Army General Mike Scaparrotti, signaling a change in how the U.S. might respond to Russian aggression, said, “There has to be change to meet the new environment.” He also said that the U.S. needs to send a “strong, clear and consistent” message to Russia about what will happen the next time military units encounter aggressive behavior. (AC: This is a sign that EUCOM is going to shore up its policy towards Russian aggression in Europe. The new strategy alone is unlikely to tip us into war, however, sending a more deliberate message to Putin does increase tension, and puts American military commanders in the region on higher alert. Their tactical choices have strategic implications, so we can expect the new policy to be very clear in pursuing options that deter aggression while not deliberately raising the prospect of armed conflict.)

Frank Kendall, the Pentagon’s Undersecretary for Acquisition and Logistics, this week said that the U.S. was dependent on Russian-made rocket engines until 2021. The Air Force’s space program is contracted out to companies like Boeing and Lockheed Martin, which use the Russian-built engines to launch satellites into orbit. Without access to those engines, the Air Force would be required to find another manufacturer, costing the Department of Defense (DOD) over a billion dollars. Kendall says that’s ‘not a good trade off’. Although some members of Congress have made attempts to force the Defense Department to find another source of rockets sooner than 2021, that date is likely set in stone if Kendall has his way. One concern for both lawmakers and the Pentagon is that an outbreak of conflict with Russia might temporarily disrupt the DOD’s ability to send new satellites into space.

In a speech at Norwich University this week, Army Chief of Staff General Mark Milley gave some advice to ROTC cadets. “If the world of 1916 was complex, or the world of 1945 was complex, the world of 2016 is intensely complex, and I can tell you that from personal experience. You’ll be dealing with terrorists, you’ll be dealing with hybrid armies, you’ll be dealing with little green men, you’ll be dealing with tribes, you’re going to be dealing with it all, and you’re going to be dealing with it simultaneously.” (AC: The terms ‘hybrid armies’ and ‘little green men’ refer to Russian President Vladimir Putin’s brand of special war, seen most recently during the invasion of Ukraine in 2014. Hybrid war has been a top concern for the Pentagon because of the use of regular troops in an irregular fashion. For instance, professional Russian soldiers and mercenaries were employed alongside pro-Russian militias against Ukrainian forces during the 2014 revolution. These soldiers posed as militia, recruited and organized pro-Russian elements in Dontesk and Lugansk, but attempted to maintain the appearance of pro-Russian Ukrainian nationals. Putin used hybrid warfare to blend professional soldiers, subversives, and Russian equipment with organic local resistance in attempts to avoid national attribution. We can likely expect Putin to continue playing a game of cat and mouse in Eurasia, exploiting pro-Russian gray zones and consolidating support among former Soviet satellite states.)

China

This week, the Chinese Ministry of State Security (MSS) began an information offensive aimed at warning its citizens against foreign spies and stressing the threats posed to China’s national security. The celebration of the inaugural “National Security Education Day” includes propaganda that reinforces the need for strong leadership from and support for the ruling Chinese Community Party in the face of mounting threats. (AC: National Security Education Day is certainly intended to foster an understanding that as China conducts espionage against foreign states, those foreign states will target China. Given the large wins like the Office of Personnel Management hack of security clearance background check files from millions of cleared American military and government personnel, the Chinese Politburo is likely attempting to avoid similar espionage directed towards the Party. Controlling sensitive information and denying foreign access to intelligence information is key to winning any conflict. By educating its people about the dangers posed to the Party — and by extension, to the nation — Chinese leaders signal their concern that they are also at grave risk of espionage, especially in the face of a looming potential conflict with the U.S. and other Asian nations. The Chinese see that educating the nation is a first step to keeping foreign adversaries in the dark.)

On Wednesday of last week, the Department of Justice charged a Chinese national in America with 18 counts, including acting as an illegal agent for a foreign government, for spending hundreds of thousands of dollars on equipment and technology and sending them back to China. Working in the College of Engineering and Computer Science at the University of Central Florida, Amin Yu, 53, purchased underwater cables and sonar equipment from the U.S., Canada, and Europe — to circumvent export laws to China — for use in Chinese research and development of submersible vehicles. (AC: China greatly benefits from having a global diaspora. Considering the number of Chinese nationals gaining residency and studying abroad, the Chinese MSS has millions of potential intelligence collectors, each capable of providing potentially valuable intelligence information. The MSS is able to gain access to foreign technology by way of students and researches at universities and corporations. Up to two-thirds of Chinese espionage is directed as industrial and economic targets, and is a significant factor in China’s rise to global power over the past several decades.)

In a letter to Fortune 500 companies earlier this year, Blackrock Capital’s Larry Fink, who oversees some $4.6 trillion in investment capital, warned that current “hysteria” over quarterly earnings reports undermines the economy. The current focus and over-sensitivity, Fink writes, that financial sector analysts apply to these quarterly earnings reports encourages short-term decision making to the detriment of developing long-term value. From an investment perspective — especially for retirement savers — long-term growth is more important than meeting quarterly estimates, yet this “short-termism” is what drives corporate behavior, and ultimately it harms the long-term economy.

In a separate note to shareholders published this month, Fink explained that government policies intended to grow the economy run the risk of generating the opposite effect. Negative interest rates mean that those saving and investing for retirement need to save and invest more, and spend less.

This reality has profound implications for economic growth: consumers saving for retirement need to reduce spending if they are going to reach their retirement income goals and retirees with lower incomes will need to cut consumption as well. A monetary policy intended to spark growth, then, in fact, risks reducing consumer spending.

(AC: Financial reporters in the alternative media have for years been warning that retirement for Baby Boomers is coming under increasing threat, and that younger Americans will need to redefine their concept of retirement entirely. Fink writes that current savers will be required to triple their investments under current economic conditions in order to enjoy the same standard of living as they’d originally planned.

This is why understanding the demographic features of your area of operations is so important! The human terrain, which is comprised of current and near-future retirees along with the savers and investors that are supporting that retirement, is a significant part of our operating environment. These trends that bode poorly for retirement as we’ve come to know it, is perhaps one of the greatest drivers of economics locally.

Our challenge then, is in the intermediate-term identifying the vulnerabilities that exist in our human terrain. Who will be most affected by these trends, and what does that mean for us? Taking into consideration that the 55+ age bracket is about to be the largest age demographic in America, how will the financial and infrastructural landscape — overcrowding of senior infrastructure, unavailability of senior care, or low-income senior care facilities — affect your AO?)

One event with national-level social and demographic implications is what Barrack Hussein Obama is going to do once he leaves office next year. Earlier this year, he said in a speech that he plans on remaining in Washington D.C., presumably to continue fighting for truth, justice, and his American way. It’s very likely that the community organizer in chief will continue to community organize. It’s all he’s ever done, anyway.

So it begs the question: how will a Barrack Obama, newly untethered from the duties of a presidency, seek to continue the fundamental transformation of the nation? His remarks this week on Black Lives Matter protests may be an indication.

“Once you’ve highlighted an issue and brought it to people’s attention and shined a spotlight, and elected officials or people who are in a position to start bringing about change are ready to sit down with you, then you can’t just keep on yelling at them,” Obama said. “The value of social movements and activism is to get you at the table, get you in the room, and then to start trying to figure out how is this problem going to be solved.”

Barrack Obama isn’t much of a traditionalist. As most presidents continue their lives outside the spotlight of national politics, I don’t think we can expect the same from Obama. Staying in D.C., we can likely expect Obama to work with high profile leaders and continue his campaign of social justice. He understands that his work isn’t done, especially if a Donald Trump or Ted Cruz is elected, which will threaten the social advancements that the Obama administration pushed.

One area where I see significant risk is leftist violence in the event of a Republican president. Through agitation and promoting the idea that social, racial, and economic inequality is not being solved, there’s reason to believe that the socialist left experiences a similar mobilization under a Republican, that pro-Second Amendment conservatives saw during Obama’s presidency. The chief requirement of a domestic conflict is a social, political, religious, or ethnic base mobilized to violent action. That’s clearly being developed on one, if not both sides.

While it’s likely too early to get into specifics of what Obama will do once he leaves office, the trend is clearly there: continue the social revolution.

Infrastructure/Energy: USGS Publishes Earthquake Forecast Map

Last month, the United States Geological Survey (USGS) published a map of forecast earthquake activity for 2016. The number of high activity areas are limited, and the USGS pegs the likelihood of damage as low — between 10%-12% — even in the most earthquake prone areas like California’s San Andreas Fault. Included in this map is Yellowstone National Park, which contains portions of Idaho, Montana, and Wyoming. The Yellowstone caldera is the world’s largest and has been the subject of much SHTF consternation. Of course, that caldera is “overdue” for an eruption, but keep in mind that a one percent deviation from its roughly 600,000 year cycle is still 6,000 or more years.

Information Systems/Surveillance/Communications:Reach of Stingray Operations Exposed in Court System

As several cases make their way through the courts, we’d like to point that a Maryland appellate court ruled that law enforcement agencies must gain a warrant before operating a Stingray cell site simulator. (Download court’s decision.) Stingrays are equipment that trick cell phones into connecting to it in order to read the metadata from your phone. Previously, local and state law enforcement have used Stingrays and equipment like it without a warrant because they claim that they’re reading data just like any other third party could. Because your cell phone emits a signal that can be read by anyone with the equipment, you’re willingly giving the information away. But from the exchange below, we find out that the equipment must contact your cell phone first in order to retrieve the data. This was a pivotal part of the court case. It’s unknown whether or not the decision will be contested in higher courts.

[DEFENSE COUNSEL]: So, how do you get information about where the phone is on the machine?

[DETECTIVE HALEY]: Because when it captures that identifier that you put into the machine or the equipment, it then tells you — it looks like a clock on the equipment. And it tells you where the signal’s coming from, like 12, 1, 2, 3 o’clock (indicating). And it will give you like a reading. Like if it says 1:00 at like an 80, well, then you know that you’re kind of close to it. But if it says 1:00 at like a 40, then you know that you’re probably within, I don’t know, probably, you know, 20 yards of it.

[DEFENSE COUNSEL]: The person doesn’t have to be using their phone for you to get that information, do they?

[DETECTIVE HALEY]: Actually, if they’re on their phone, then they’re already connected to — in this case, the Sprint network. And we’re not going to be able to pull them off of that until they’re — until they hang — until they hang the call up.

[…]

[DEFENSE COUNSEL]: When I am not on my phone, you will drive by my house, and you will get a signal from my phone indicating where I am, right?

[DETECTIVE HALEY]: Correct.

[DEFENSE COUNSEL]: If I am using the phone, you won’t get that signal, right?

[DETECTIVE HALEY]: Correct.

[DEFENSE COUNSEL]: So, the phone cannot be in use. You are searching for my phone as you’re driving through my neighborhood, right?

[DETECTIVE HALEY]: Yes.

[DEFENSE COUNSEL]: And in order to get to my phone, you are sending an electronic signal into my house, right?